Shell (LSE:SHEL) has updated its outlook for the second quarter of 2026, indicating broadly stable to slightly higher production across most of its operations. Output from the Integrated Gas division is expected to be affected by the conflict in the Middle East and production volumes from Qatar. Despite these challenges, the company anticipates a significant improvement in trading and optimisation performance within Integrated Gas, while marketing earnings are forecast to remain broadly in line with the first quarter. Refining margins are also expected to remain strong, although realised margins will be lower due to ongoing market dislocations.
The Chemicals and Products division is expected to benefit from stronger indicative refining and chemical margins, supported by refinery utilisation rates close to full capacity. Chemical plant utilisation is, however, expected to ease slightly. Shell also expects cash flow from operations to improve as working capital reverses following the substantial outflows recorded in the previous quarter during a period of heightened commodity price volatility. The updated guidance highlights the continuing impact of geopolitical uncertainty and fluctuating energy prices on quarterly production volumes, margins and trading performance across the group’s operations.
The company’s outlook continues to be supported by a reasonable valuation, with a price-to-earnings ratio of around 12 and a dividend yield of approximately 3.47%. Recent management commentary has also been positive on shareholder returns, cost reduction initiatives and growth opportunities linked to ARC. These strengths are balanced by moderating financial momentum, including softer revenue and free cash flow trends, as well as weaker technical indicators and continued short-term disruption from volatile commodity markets.
More about Shell
Shell is one of the world’s largest integrated energy and petrochemicals companies, operating across integrated gas, upstream exploration and production, marketing, chemicals and products, as well as renewables and energy solutions. The company produces, trades and supplies oil, natural gas and liquefied natural gas (LNG), while also operating refineries, chemical manufacturing facilities and an extensive global fuels and lubricants network. Alongside its traditional energy operations, Shell continues to expand its presence in lower-carbon energy and electricity markets.
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